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The Tamil Nadu government on Monday cancelled allotment of land for Hindustan Coca-Cola Beverages Pvt Ltd to set up a bottling unit in Perundurai SIPCOT complex in Erode district, amid growing protests by local residents over possible exploitation of groundwater. The Tamil Nadu government took the decision to cancel the lease agreement, blaming the firm for “not complying with the terms”. Sources, however, said mounting pressure from locals forced the government to scrap the project.

The company, however, blamed the government for the inordinate delays in granting pre-requisite approvals for commencing construction and sought refund of the entire money paid for these approvals. In a statement on Tuesday, the beverage company said it could not apply for ‘consent to establish’ despite sending repeated reminders to SIPCOT. “These inordinate delays, coupled with local activism against the project, could not have been foreseen nor prevented by us. Despite best efforts to address concerns, we could not commence construction and the project cannot be executed,” it said.

News about cancellation of allotment was greeted with much excitement in the region with locals celebrating by setting of fireworks and distributing sweets. “Our one-and-a-half years of protest finally succeeded. Never realized it would be achieved so soon,” Erode district organizer of Tamil Nadu Environmental Safety Movement R Mukilan said. Residents expressed strong objections during the public hearing and intensified their protests by shutting down shops across Perundurai and surrounding villages in February.

The company was allotted 71.34 acres in the complex in two parcels between June 2013 and January 2014. The lease deed was executed for 17.9 crore for a period of 99 years. According to official sources, the action was taken after the firm replied to a show-cause notice saying there was no “feasibility” of taking up the work now.

The greenfield state-of-the-art bottling plant was proposed at a cost of 500 crore in 2014. In a statement, Coca-Cola said it was committed to invest in TN and looked forward to it. “However, the company has written to the state government that due to unforeseen pressures and delays it will not be able to invest in SIPCOT, Perundurai,” it said.

It sought pre-requisite approvals for draft copy of the ‘water agreement’ to procure water from New Tirupur Area Development Corporation Limited. The public limited company promoted by Tirupur Exporters Association jointly with state and central governments and Infrastructure Leasing and Financial Services Limited (IL &FS), Mumbai, was to supply water from Cauvery river on payment. Coca-Cola said the payment was made for laying of water line from SIPCOT entrance to the allotted site and for effluent transfer lines.